Suppose the economy goes into a recession and private households wish to savemore while businesses wish to invest less. Suppose that at the same time Congresswishes to 'get its fiscal house in order' and balance the federal budget. (Assume thereis no foreign trade.) According to the lectures, which of the following is not possible.Households (in the aggregate) successfully save more than intended investmentwhile the federal government successfully balances the budget.Increased leakages through savings and taxes, compounded by decreasedgovernment and investment spending, create a 'paradox of thrift' situationThe government successfully balances the budgetO Congress is surprised that higher taxes and lower outlays actually increased thefederal deficitThe private sector runs a 'surplus', saving more than it invests

Recession refers to the contraction time period of the economy when there is a downturn phase. It…

Suppose the economy goes Int more while businesses wish to invest less. Suppose that at the same time Congress wishes to 'get its fiscal house in order' and balance the federal budget. (Assume there is no foreign trade.) According to the lectures, which of the following is not possible. recession and private nousenolds to save

Suppose the economy goes Int more while businesses wish to invest less. Suppose that at the same time Congress wishes to 'get its fiscal house in order' and balance the federal budget. (Assume there is no foreign trade.) According to the lectures, which of the following is not possible. recession and private nousenolds to save

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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